{"id":62768,"date":"2026-06-05T16:38:35","date_gmt":"2026-06-05T20:38:35","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/nasdaq-plunges-4-in-tech-rout-as-bank-deposits-rise-and-boe-cautions-on-ai\/62768\/"},"modified":"2026-06-05T16:38:35","modified_gmt":"2026-06-05T20:38:35","slug":"nasdaq-plunges-4-in-tech-rout-as-bank-deposits-rise-and-boe-cautions-on-ai","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/nasdaq-plunges-4-in-tech-rout-as-bank-deposits-rise-and-boe-cautions-on-ai\/62768\/","title":{"rendered":"Nasdaq Plunges 4% in Tech Rout as Bank Deposits Rise and BOE Cautions on AI"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>The Nasdaq Composite (<a href=\"\/stock\/%5EIXIC\">^IXIC<\/a>) plummeted 4.00%, or 1,072.37 points<\/strong>, marking its steepest single-day decline since October as a massive sell-off in technology and semiconductor shares erased over $1 trillion in market value.<\/li>\n<li><strong>U.S. bank deposits climbed to $19.333 trillion<\/strong> from $19.285 trillion the previous week, according to the Federal Reserve\u2019s H.8 release, suggesting a flight to liquidity amid heightened market volatility.<\/li>\n<li><strong>Bank of England Governor Andrew Bailey warned that AI innovation will take time to impact economic growth<\/strong>, cautioning that current market valuations may be overly optimistic as &quot;everyone is currently priced to be a winner.&quot;<\/li>\n<li><strong>S&amp;P Global affirmed Sweden\u2019s &#39;AAA\/A-1+&#39; sovereign credit rating<\/strong> with a stable outlook, citing the nation&#39;s resilient economy and strong fiscal headroom despite increased defense spending.<\/li>\n<li><strong>Nearly 1,000 commercial ships crossed the Strait of Hormuz<\/strong> over the last two months, according to U.S. Central Command, indicating continued maritime flow despite ongoing regional tensions and blockades.<\/li>\n<\/ul>\n<h2>Tech Sell-off Drags Wall Street Lower<\/h2>\n<p>U.S. equity markets faced a brutal session on Friday as the <strong>Nasdaq Composite (<a href=\"\/stock\/%5EIXIC\">^IXIC<\/a>) unofficially closed down 4.00% at 25,758.58<\/strong>. The <strong><a href=\"https:\/\/stockmarketwatch.com\/indices\/sp500\/today\" data-internallinksmanager029f6b8e52c=\"3\" title=\"snp500 today\">S&amp;P 500<\/a> (<a href=\"\/stock\/%5EGSPC\">^GSPC<\/a>)<\/strong> followed suit, dropping <strong>2.55% to 7,390.59<\/strong>, while the <strong><a href=\"https:\/\/stockmarketwatch.com\/indices\/dowjones\/today\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Dow Jones Today\">Dow Jones<\/a> Industrial Average (<a href=\"\/stock\/%5EDJI\">^DJI<\/a>)<\/strong> shed <strong>1.22% to end at 50,933.18<\/strong>.<\/p>\n<p>The rout was fueled by a stronger-than-expected May jobs report, which showed <strong>172,000 jobs added<\/strong>, nearly double analyst expectations. This robust data effectively eliminated hopes for a Federal Reserve rate cut, with markets now pricing in a <strong>60-70% chance of a rate hike<\/strong> by year-end to combat persistent inflation.<\/p>\n<p>Heavyweight technology names led the decline, with Nvidia (<a href=\"\/stock\/NVDA\">NVDA<\/a>) falling <strong>6.3%<\/strong> and Broadcom (<a href=\"\/stock\/AVGO\">AVGO<\/a>) dropping <strong>7.6%<\/strong>. Meta (<a href=\"\/stock\/META\">META<\/a>) shares slid <strong>6% to 7%<\/strong> following reports that the company may seek a multi-billion dollar secondary stock offering to fund its massive AI infrastructure investments.<\/p>\n<h2>Banking Sector Sees Deposit Growth<\/h2>\n<p>Despite the turmoil in equity markets, the U.S. banking system saw a notable increase in liquidity. Total <strong>U.S. bank deposits rose to $19.333 trillion<\/strong>, up from $19.285 trillion the prior week, according to the Federal Reserve&#39;s weekly <strong>H.8 release<\/strong> on the assets and liabilities of commercial banks.<\/p>\n<p>This <strong>$48 billion weekly increase<\/strong> suggests that investors may be rotating out of riskier assets and into the relative safety of cash and bank deposits. <em>Analysts noted that while the broader market struggled, the banking sector remains well-capitalized, with domestic deposits showing steady growth through the first half of 2026.<\/em><\/p>\n<h2>BOE Governor Tempers AI Expectations<\/h2>\n<p>Bank of England Governor <strong>Andrew Bailey<\/strong> provided a sobering perspective on the artificial intelligence boom during a speech on Friday. Bailey noted that while AI is a &quot;general-purpose technology,&quot; history shows that <strong>innovation takes significant time to affect productivity and growth<\/strong>.<\/p>\n<p>Bailey specifically cautioned against the current &quot;hype&quot; surrounding AI valuations, stating that <strong>stock markets may be miscalculating future earnings flows<\/strong>. &quot;To assume that all companies today are profitable in the long run is not in line with the facts of history,&quot; Bailey remarked, adding that many early internet pioneers did not survive the long term.<\/p>\n<h2>Global Macro and Geopolitical Updates<\/h2>\n<p>In sovereign credit news, <strong>S&amp;P Global affirmed Sweden&#39;s &#39;AAA\/A-1+&#39; rating<\/strong> with a stable outlook. The agency expects Sweden&#39;s economic growth to reach <strong>2.1% this year<\/strong>, supported by strong military exports and a long-term plan to expand nuclear power generation, which offsets the impact of rising general government debt.<\/p>\n<p>In the Middle East, U.S. Forces reported that nearly <strong>1,000 commercial vessels<\/strong> have transited the <strong>Strait of Hormuz<\/strong> in the last two months. While this figure is higher than private sector estimates, it highlights the continued use of &quot;dark&quot; transits\u2014where ships disable transponders\u2014to maintain global energy flows through the contested waterway.<\/p>\n<p>Finally, <strong>President Trump<\/strong> held an American Agriculture Roundtable in <strong>Chippewa Falls, Wisconsin<\/strong>, focusing on the dairy industry and rural economic policy. The President discussed plans to <strong>lower input costs and expand export markets<\/strong> for Wisconsin farmers, emphasizing the importance of the agricultural safety net as the 2026 midterm election season approaches.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways The Nasdaq Composite (^IXIC) plummeted 4.00%, or 1,072.37 points, marking its steepest single-day decline since October as a [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":50383,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"rank_math_schema_Article":[],"rank_math_focus_keyword":[],"rank_math_description":[],"financial_data_references":[],"stock_symbols_mentioned":[],"footnotes":""},"categories":[5012],"tags":[95,633,2919,3741,4930,5024,7213,17148,19110],"class_list":["post-62768","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-breaking-news","tag-nasdaq","tag-nvda","tag-avgo","tag-meta","tag-banking","tag-trade","tag-stockmarket","tag-artificialintelligence","tag-sovereigncredit"],"_links":{"self":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/62768","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/comments?post=62768"}],"version-history":[{"count":0,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/62768\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/media\/50383"}],"wp:attachment":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/media?parent=62768"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/categories?post=62768"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/tags?post=62768"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}